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What is coinsurance and how does it work?

Who is this for?

This information will help you if you're shopping for health insurance and have questions about how it works and how your money is spent.

Put simply, coinsurance is your share of the costs of a health care service.

The coinsurance is the percentage of the amount your insurance company allows to be charged for services. Your health insurance company then pays the remainder of the bill. You start paying coinsurance after you've paid your plan's deductible amount.

How does it work?

Let’s say Mike has the Blue Cross® Select Gold HMO plan. He’s already paid his $250 deductible and would like to have a mole removed from his back. His primary care physician refers him to a dermatologist, who will perform the outpatient surgery for $500. Mike’s plan will cover 80 percent of the cost for the service. Mike’s coinsurance is 20 percent of the cost, or $100.

Here’s another example. Lisa has the Community Blue PPO plan through her employer. She fell while playing a game of flag football with her family and hurt her wrist. She goes to the doctor to get an X-ray. Her plan covers 90 percent of the cost, which is $180. Since she doesn’t have to pay toward her deductible for diagnostic tests like X-rays, Lisa is just responsible for 10 percent coinsurance, or $18.

Since Lisa has a PPO plan, she has the option of seeing any doctor she wants. What if she decides to go to a doctor who isn’t in her plan’s network? Unlike Mike, Lisa’s plan will still share the cost but she’ll pay more. Her coinsurance will be 30 percent instead of 10. And if the charge for the X-ray is more than what her plan would pay for the service from an in-network doctor, she’ll have to pay the difference.